Shares of SRF Ltd. fell as much as 6.5% on Wednesday, October 21, after its September quarter results missed street expectations on the operating front, despite showing an increase on a year-on-year basis across parameters.
SRF’s net profit for the quarter stood at ₹509 crore, a growth of 31.2% from the year-ago quarter, but the figure turned out to be lower than the CNBC-TV18 poll estimate of ₹598 crore.
Revenue for the quarter stood at ₹4,904 crore, a 34.7% growth from last year, and higher than the CNBC-TV18 poll figure of ₹4,695 crore.
Operating performance of SRF was weak with Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) increased by 22.1% from last year to ₹946 crore. However, the figure was lower than the CNBC-TV18 poll of ₹1,055 crore.
EBITDA margin though, narrowed by 200 basis points to 19.3% from 21.3% last year, while a CNBC-TV18 poll had pegged the margins to expand to levels of 22.5%.
SRF’s chemicals business revenue increased by 25% from last year to ₹2,079 crore from ₹1,667crore last year. The segment’s operating profit also grew by 10% during the same period. The fluorochemicals business saw robust refrigerant sales volumes, while the specialty chemicals business navigated a dynamic operating environment shaped by evolving global pricing trends, industry overcapacity in China, and ongoing geopolitical developments, the company said in its earnings remarks.
The company’s Performance Films & Foil business reported a 51% growth in topline to ₹2,122 crore during the quarter, while operating profit saw growth of 73%. SRF said that demand was moderated by inventory build-up following heightened buying activity amidst the volatility seen in the previous quarter. Demand for Aluminium foil remained healthy.
Technical textiles business for SRF saw growth of 25% in its topline to ₹595 crore during the quarter, while operating profit grew by 71%.
SRF’s board has approved a ₹600 crore investment to establish a battery-grade Aluminium foil manufacturing facility in India. The proposed facility will have a total capacity of nearly 12,000 MTPA, and will cater to both lithium ion and sodium ion battery applications. The investment will be undertaken in two phases with a ₹300 crore investment for each. The first phase will come on stream in September 2028 and the second one in September 2030, the company said.
Shares of SRF are trading 5.3% lower after the results announcement at ₹2,302.1. The stock is down 25% so far this year.